Acorn Advert - December 1985

From Personal Computer World

BBC External Services

This advert seems to represent the end of a period of retrenchment for Acorn following a difficult year which had seen it bailed out by Italian company Olivetti back in February. For most of the year it had struggled with ongoing financial crises and seemed to have stopped advertising altogether by the summer, a situation exacerbated by the fact that two of its advertising/PR companies - Quentin Bell and Aspect - had bailed out on the company. There's also a subtle change of advertising content: gone are any references to home use - this advert is positioning the 128K BBC purely as an educational machine.

Acorn abandons the home market

The first signs of a major change in direction for Acorn also appeared around March, not that long after the Olivetti rescue. Continuing to deny rumours that it was pulling out of the home market, the company was however admitting that it would be unlikely to restart production of its Electron model any time soon, although Acorn's new chairman and acting chief exec was keen to point out that Acorn "will be continuing to sell the Electron this year and hopefully next year as well". Alex Reid continued "Whether we will go into production again will depend on our sales levels during the year" before confirming that Acorn's newly-reorganised Consumer Division would be bringing out "further micros" under the BBC label, and that the ABC machines would be redefined in terms of their market position. Acorn would also become an OEM - meaning it would build machines for other companies to put their own labels on - with the Acorn/Torch Communicator set to become "a major focal point of Acorn's range". There was also a cryptic reference to the RISC/ARM project, mentioned as an "advanced computer project being developed in Palo Alto for 1986-87"[2].

By the end of 1985, Acorn had all-but disappeared from the High Street, with retailers having given up on selling the BBC Micro and with only a few Electrons available from Dixons, which in a top-secret deal had picked up almost all of Acorn's available stock - thought to be around 120,000 machines[3] - during the summer[4]. This allowed Dixons, which was clearly on a spree as it had picked up all of Sinclair's un-sold Spectrum Plusses at about the same time, to reduce the price of the machine to £100 (£300) as a bundle including a cassette recorder and software - a move that was not entirely popular with other retailers like WH Smith. John Rowland, Smith's merchandising controller said "when we tried to buy some more [Electrons] I had a problem finding anyone to talk to me about the Electron at Acorn. Then came the news of the Dixons deal"[5].

The discount price was not without precedent, as several other High Street retailers including Macro, Laskys and supermarkets Asda and Safeway had been selling the Electron for £100 since late summer - less than the wholesale price a few weeks before - but the new official price was causing frustration amongst small retailers stuck with Electrons they'd paid more than £100 for[6]. Although done for reasons of initial failure rather than success, the whole thing was reminiscent of how Commodore had torched its dealers when the 64 became popular and the company slashed the price and started selling through supermarkets. When Acorn later launched its BBC Plus, the company, like Commodore when it was trying to get back in to the business computer market, also had to repair burned bridges with its dealers[7].

By the middle of September, WH Smith had discontinued both the BBC and the Electron, and Rumbelows was said to be not re-ordering until it had decided whether Acorn's machines would be on its Christmas list. Terry Greenwood of Rumbelows said "We're completely out of stock of the BBC at the moment, but we still have to decide which micros we'll be offering at Christmas and we're no more likely to drop the BBC than any other machine"[8]. There was clearly some turmoil in Acorn's dealer network, with its biggest dealer LVL going in to receivership at the end of September, owing £1.5 million, and other dealers critical of the company and its pricing structure, where the 64K B+ was at £469 and the 128K B+ was at a pricey £499. One said of the new 128K BBC and B+ "We have never stocked the B+ and we won't be taking the 128K - I don't think their packs are value for money. You can build a B+ micro from components I sell seperately for slightly less than the micro costs in the shops". Another said that they had "Not yet seen a 128K - nobody has asked us for one yet. There will probably be no alteration on price: Acorn are stubborn" whilst Popular Computing Weekly had suggested earlier in the year that Acorn's pricing policy was "almost suicidal" and blamed it for putting the company into its current financial difficulties[9].

Although apparently still very keen to deny that it was abandoning the home computer market, Acorn was nevertheless making moves to shift its emphasis on to purely educational computers when now-parent company Olivetti signed a "collaboration agreement" with French government-owned Thomson Micro Informatique to develop a common European standard for education micros, a move thought also to be, in part, an answer to the MSX threat. Thomson for its part had recently secured a contract to supply the USSR - which was opening up thanks to Mikhail Gorbachev, Glasnost and Perestroika - with experimental micros based on its TO7 and MO5 computers[3]. The attempt to take on MSX didn't seem to last long, as Thomson announced in November that it had dropped its plans to develop, along with Philips, a Euro-standard micro[11].

Also in November, it seemed that Acorn's High-Street troubles were getting worse, with news that apart from Dixons/Currys none of the regular stockists were planning on offering either the BBC Micro or the Electron over the crucial Christmas period. This was not necessarily because they didn't want to, but simply because the machine was becoming unobtainable - further fuelling the speculation that it had been discontinued entirely, a claim which Acorn was still denying. Independent dealers were, for their part, sticking mostly to the BBC Plus and the 128K, with one dealer suggesting "The standard 32K BBC still sells very well, but it is extremely difficult to get them because Acorn doesn't seem to be making them any more. Also, there is not a lot of point in buying Electrons since [High-Street retailer] Greens is selling them at £69 up the road". Another dealer reported that they couldn't "get the 32K BBC for love nor money - Acorn seems to have stopped manuafcturing them". Acorn, meanwhile responded by saying "It is not true we have stopped making the 32K BBC Micro, and I would have thought it surprising if High Street retailers are not going to buy Acorn machines for Christmas[12].

Only weeks later, Acorn finally admitted (in December 1985's Your Computer) that the 32K BBC B had indeed been discontinued - almost four years to the day since it had been launched - in favour of the 128K BBC Plus, which it was still optimistically trying to sell for an expensive £500 (£1,530 in 2019). Whilst this might have been the same price as the previous 64K Plus, it was £100 more than the Amstrad CPC 6128, a machine which even included a floppy disk drive and a colour monitor in its price of £399. David Kelly, writing in Popular Computing Weekly, put it well when he said "Why are there now three BBC models competing only with each other and all wildly overpriced? Acorn's strategy for the home computer market is a shambles"[13].

Some good news from North America

As something of a compensation for its run of bad news, Acorn did get a £1 million order from the Ontario Ministry of Citizenship and Culture in Canada for 1,000 BBC Micro systems in the autumn of 1985, although this didn't by itself do much to pay back the £8 million that Acorn spent on trying to crack the North American market or indeed the £22.2 million loss it posted for the year ending June 30th 1985, based on a turnover of £77.9 million that was 16% lower than the previous year. The success against nine other competitor micros was said to be the amount of software available, with the company's Joe Black - sales director of Acorn's Education, Training and Consumer Division - saying "In particular we benefitted because we could offer a huge range of software, having fitted the machines with UK operating systems. Altogether we listed 500 titles which we specifically recommended written by Acorn, the BBC and other software houses"[15]. It was the otherwise-failed attempt to break in to North America that directly led to Acorn's financial collapse and its bail-out/take-over by Olivetti[16]. There was also a minor breakthrough in New Zealand, where the BBC Micro was already estabished in Wanganui's school system, a town on the North Island's west coast with a population of some 33,000. The Electron was being trialled as a teaching aid in Wanganui's primary schools, with Deputy Principal of the local girls' college Colin Clancy saying "we see the move as a logical extension to the introduction of the BBC Micro here. The Electron is seen as a stepping stone at primary school level to introduce the younger children to the world of the micro"[17]. This was followed by even more good news from the US when Acorn struck a $1.25 million deal with the British American Scientific Instruments Corporation, the Texan subsidiary of the Mexican electronics manufacturer Datum. Under the terms of the deal, Datum, which had been associated with Acorn for a few years since it had produced a Spanish keyboard for the BBC, acquired all the remaining US stocks of the US version of the BBC Micro and was given manufacturing rights, which it hoped to use to produce BBC Micros for sale in the US, Central and South America. Valerie Holt, Acorn's corporate communications manager quipped "Instead of losing money in the states, we will now be making some"[18].

The Christmas sales period of 1985 did actually see the Electron take second spot in the UK, at 20% of the market, with Dixons/Curry's offering 100,000 Electron bundles at just under £100 to keep the momentum going. It was also true that the release of various add-ons to fill in the functionality gaps that the Electron had with the BBC had made the Electron "as close as it can get to the BBC Micro", and at a quarter of the base price of its bigger brother it was certainly competitive. Acorn's marketing boss John Caswell said of the resurgence of the Electron in the face of much negative publicity, largely about Acorn's shaky finances, that "it's tremendous news, we are obviously delighted. For so long the general computer press has been putting out only the worst news about Acorn, but things were never as bad as they were being painted and we always had faith that there was a lot of life left in the Electron"[19].

Meanwhile, back at the beginning of 1985, a report published by Market Assessment Publications was forecasting bad times for the industry as a whole, although with a long-view that stated that the market would fall from a peak of 1.9 million micros per year to 1.2 million by 1998. It was also forecasting that "in the long run, it is conceivable that home computers will become major items of household equipment. An expansion of computer use beyond games to include domestic management is quite feasible". It also reported that "Sinclair remains the undisputed market leader with 43% of the market, followed by Commodore at 22% and Acorn at 10%". Perhaps more significantly though, it prophesied tragedy amongst smaller micro manufacturers, saying that "at present there are around 38 brands of computer, many of which are small and lack the public awareness which established names have. How long these relatively small ones will survive is a matter for debate, but a reduction in the number of models available seems inevitable. The smaller machines look vulnerable, especially if MSX quickly gains popularity"[20]. It certainly did seem the case that the era of the £100-£200 home micro was over. Although at the end of 1985 it was suggested that the average price of a micro was still around the £200 mark, it was looking like £450 was going to become the new norm. The reason for this was as much indirect, as software was becoming more demanding and so required disk drives instead of cassettes and hi-res graphics required monitors instead of televisions. But it was also that the machines themselves and the requirements for a home computer were rising up the ladder. Even Jack Tramiel - armed with his famous phrase "for the masses, not the classes" - was selling his entry-level Atari 260ST for £450; Amstrad's market-busting CPC 6128 was £400 for the colour version and the Amiga - the micro that everyone wanted but maybe few could afford - went on to sell millions despite its initial £1,000 price tag. As David Kelly writing in Popular Computing Weekly was predicting: "Could you spend £500 on the right micro? Could you spend £1,000? What happens to home micros may depend on your answer"[21].

It wasn't just MSX that posed a threat to Acorn, as several companies wanted in on Acorn's lucrative schools semi-monopoly. In 1982 Apple had dropped the price of its IIe for educational users to around £400 in order to take on the BBC Micro[22] and in early 1985 it renewed this attack by heavily promoting sales of its micros into schools. Apple UK managing director David Hancock said, without a trace of hyperbole, that "I think it is tragic that the education of our children has for years been adversely affected because schools have not been given a chance to use the one personal computer, with 2,000 proven educational software packages worldwide, that can do the job the government requires. This is of grave concern to teachers and parents alike - and I include myself as a father of four"[23]. Whilst that might have been true in the US, where the Apple II was the dominant educational computer, it wasn't in the UK where there was more education software available for the BBC than any other machine[24], and anyway Apple may have been selling the 1977-designed, 1982-updated Apple IIe for around the same as the popular BBC Micro, but there were plenty of other micros available for a fraction of these prices to cash-strapped schools.

Brian Long ended up quitting Acorn in the late Autumn of 1987 in a move that, according to Acorn spokesman Michael Page was "not particularly expected". He continued "He's decided to resign as managing director from the end of [October]. The chairman, Bruno Soggiu, is taking on executive responsibility for the time being, but it his intention to appoint someone as soon as possible". The resignation came after a continuation of poor results for Acorn, which had hoped that its new 1987 Archimedes would sort out its long-running financial problems. The problem was was that it was investment in the Archimedes which had been keeping the company in the red[25].